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Rupee Outlook and Strategy

• The US dollar edged up yesterday amid risk aversion in global markets. Further, stronger-than-expected economic data from the US raised fears that the Federal Reserve will keep interest rates higher for longer to cool the economy and bring down inflation

• Rupee future maturing on December 28 depreciated by 0.66% yesterday amid pessimistic global market sentiments, strong dollar and FII outflows. Further, market participants remained cautious ahead of RBI’s monetary policy

• The rupee is likely to depreciate today amid a strong dollar and risk aversion in global markets. Further, persistent FII outflows may hurt the rupee. Also, investors will remain vigilant ahead of RBI’s monetary policy, where the central bank may slow down the pace of rate hike. The rate hike is expected to be in the range of 25-35 bps. Market participants will also focus on statements from the centralbank to get hints on future monetary stance. US$INR (December) may trade in a range of 82.25-82.85

Euro and Pound Outlook

• The Euro slipped yesterday, mainly on the back of a strong dollar and pessimistic global market sentiments. Further, two ECB officials signalled that inflation and rates may be close to peaking. However, better-than-expected economic data from Germany prevented a further decline in the Euro. German factory orders increased by 0.8% in October 2022 compared to a 2.9% decline in September 2022

• The Euro is expected to trade with a negative bias amid a strong dollar and risk aversion in global markets. Further, expectations of disappointing economic data from the Euro Area will hurt the single currency. German Industrial Production is forecasted to decline by 0.6% in October 2022. Additionally, less hawkish statements from policymakers will effect the Euro. EURUSD is facing resistance near 1.0500 levels. As long as it sustains below this level the EURUSD may slip back to 1.0380 levels. EURINR (December) is expected to trade in a range of 86.20-86.85

• The pound depreciated yesterday mainly on the back of a strong dollar and weak global market sentiments. Further, the sterling slipped on disappointing economic data from the UK. UK Construction PMI fell to 50.4 in November 2022 from 53.2 in the preceding month, indicating activity in British construction industry slowed down

• The pound is expected to trade with a negative bias on the back of a strong dollar and risk aversion in global markets. Moreover, a series of poor economic data from Britain indicates that high borrowing cost is impacting the economy severely. GBPUSD is facing strong resistance near 1.2200 level. As long as it sustains below this level the pound may slip back to 1.2050 levels. GBPINR (December) is expected to trade in a range of 100.0-100.65

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